Don’t Be Afraid To Take Some Risks With Your Investments
Having lived through a recession, many millennials are trying to preserve their savings by keeping out of equity investments. Though young investors should have the most aggressive portfolios, including a heavy weighting of stocks, 52% of millennials surveyed indicated low confidence in the stock market, according to CNN. While you won’t lose money in a savings account, without investing it you also won’t be able to help grow that money. The younger you are, the more you’ll want to invest that money in equities because you can still afford to take the greater risk for higher reward than if you invested the money in bonds.
Risk aversion is understandable, but too much can work against you. Not only do the potential gains of investing in stocks outweigh the risks, but if you hold a diversified portfolio of stocks, bonds and other asset classes, your odds of losing much money are greatly diminished.
The Bottom Line
It’s true: Millennials are going to have a tough time reaching the same financial benchmarks that their parents did, from homeownership to retirement. Luckily, many have also learned valuable lessons about planning for the future from watching unpredictable markets. The trick for millennials is to make sure their cautious nature toward money doesn’t handicap their investments. By continuing to save and accepting some risk, millennials can make the most of the hand they’ve been dealt.
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